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The greening of business. Environmental management and performance evaluation: anempirical study of the Dutch dairy industry

Mauser, A.M.

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Citation for published version (APA):Mauser, A. M. (2001). The greening of business. Environmental management and performance evaluation: anempirical study of the Dutch dairy industry. Eburon.

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Download date: 10 Mar 2021

8 REFLECTIONS ON THE GREENING OF ORGANIZATIONS

Given the main research question of this study regarding the drivers for environmental performance, and the results of the case study, some questions need to be answered. What exactly is meant by environmental performance? And (how) can we measure it? What are the main drivers for environmental performance? What are the managerial and policy implications? Is the original research model still valid? And, to what extent can this study be generalized? In other words, what can we learn from this study?

In order to answer these questions, first, we reflect on measuring environmental performance and management (8.1) and on the relation between the independent variables and environmental performance (8.2). On the basis of these reflections, the research model is reviewed (8.3). We then explain the value of the Dutch dairy industry as a case study to test the research model and consider the value of this study, both in a broader industry-wide and in an international situation (8.4). Finally, the managerial and policy implications of the research model are discussed.

8.1 Measuring environmental performance

Our analysis of existing environmental management models and performance evaluation systems led us to the conclusion that a standardized, commonly agreed and comprehensive environmental performance evaluation system was not available at the start of the empirical research of this study. Three main problems regarding the use of environmental management models were distinguished: their limited suitability for specific situations; their insufficient reflection of organizational and strategic complexity; and, the difficulty of operationalizing the models. However, with the introduction of the model of Ghobadian et al. (1998), 'the spatial approach to mapping corporate environmental behavior', a 'second generation' of non­linear models was born. This model overcame important drawbacks of many continuum models of 'the first generation', because it is non-linear, flexible and has a broad focus. It thus indirectly proved the weaknesses and lack of practical feasibility of most existing linear models. However, neither did Ghobadian et al.'s model provide the framework to evaluate the actual environmental performance of an organization, as it gave serious problems with practical implementation due to its complexity. Moreover, it was still based on stages that an organization had to pass through consecutively. The analysis of the existing models and systems led to the conclusion that there was no clarity about or agreement on the definition of environmental performance. Furthermore, environmental management is often considered a part of an organization's environmental performance, whereas these two aspects need to be separated because management focuses on policies and measures, while performance is concerned with outcomes.

As no single existing model and system provided the tool to actually measure a company's environmental performance, a new tool was developed that used their insights and tried to ivercome their drawbacks. In order to be able to evaluate organizations' environmental performance and learn about the drivers, a case study in the Dutch dairy industry was set up. The general structure of this tool was fine-tuned on the basis of the specifics of the dairy industry. Since the beginning of this project, more standardized and commonly agreed-upon environmental performance evaluation systems, such as the ISO 14031 and the Global Reporting Initiative (GRI) guidelines, have been developed. Therefore, the insights provided ~) these systems were incorporated in the final construction of the measurement tool of this

206 The Greening of Business

study. Some lessons can be learned from this experience to evaluate environmental performance in the Dutch dairy industry.

Environmental performance is used in many different ways: some focus on the actual environmental impact of organizations, others address mainly environmental operations and management. Frequently, environmental performance is assessed from an often arbitrary mi\ of environmental management, operations and impact. Therefore, for a complete evaluation of environmental performance, it is necessary to devise a set of indicators to make a clear distinction between the organization's actual environmental performance (EP1). environmental management (EMIs) and the conditions under which it operates (ECIs). This study incorporated both the EMIs and the EPI separately, but the ECIs were beyond the scope of our present study. The distinction between environmental management and performance. and the subsequent division of environmental performance into environmental operations and impact, proved to be valuable in providing insight into the rich concept of environmenlai performance. Figure 8.1 shows the breakdown of the broad concept of environmental performance as it was used. In this study, the two main sub-indicators of environmental performance (EPI): environmental operations (EOI) and impact (Ell), were further divided into more detailed sub-indicators related to their relevant fields. The EOI was subdivided into EOI regulation; EOI procurement; EOI technical process & product measures; and, EOI post-production. The Ell consisted of three parts: Ell energy; Ell water; and, Ell other. Subsequently, four EMIs were discerned: EMI policy & strategy; EMI communication; EMI organization structure; and, EMI management commitment. The EMI policy & strategy was further broken down into three categories: policy; systems; and, documents. Likewise, the EMI management commitment comprised three dimensions: affective; continuance; and forced. Finally, the ECIs were mentioned, although it proved impossible to measure them as part of this study.

Figure 8.1: The interpretation of environmental performance in this study

Environmental performance in the broadest sense

^

Environmental performance indicator (EPI):

• Environmental operational indicator (EOI):

EOI Regulation EOI Procurement EOI Technical process & product measures EOI Post-production

• Environmental impact indicator (Ell):

Ell Energy - Ell Water - Ell Other

T Environmental management

indicators (EMIs): EMI Policy & strategy:

Policy Systems Documents

EMI Communication EMI Organization structure EMI Management commitment:

Affective Continuance Forced

V Environmental condition indicators (ECIs): To be developed

Reflections on the Greening of Organizations 207

The recently published ISO 14031 and GRI guidelines have not provided such a far-reaching division. Although both systems do incorporate environmental management in terms of policies and programs, they still view environmental management as a part of environmental performance. In addition, the other EMIs - communication; organization structure; and, management commitment - are not specifically addressed in these systems. Compared with

i ISO 14031 and GRI, the measurement tool of this study produces internal information which might help managers to understand, and possibly improve, environmental performance, and give external parties the possibility to watch organizations' behavior. This internal part is in important surplus value of the environmental performance evaluation system developed in this study. However, this does not mean that either ISO 14031 or GRI need to have such an internal role, as this information can also be retrieved by other means. Moreover, these systems were both designed for external reporting or auditing.

Given this breakdown of environmental performance, it is impossible to draw conclusions on the relative importance of the various parts of environmental performance and management. Instead, this study proves the importance of gaining insight into how an organization scores OD these aspects, their differences and their relations. In this way, it is possible to identify and larget the areas where action or improvement might be needed.

However, the measurement tool as developed in this study also has some limitations. The «hole field of environmental performance is so complex and sensitive for the conditions under which an organization operates that it is quite impossible to cover the entire field with a standardized evaluation tool. As already mentioned above, environmental condition indicators lECIs) are very hard to develop in a standardized way, let alone to operationalize. Therefore,

; study did not try to assess ECIs, but rather it describes the specific conditions in those cases where they were distinguishing. In the case of the Dutch dairy industry for example, the extent to which Norton water (groundwater) can be used without threatening the groundwater level is important condition information to measure a facility's environmental performance. Nevertheless, the interpretation of this information is closely related to other industrial, agricultural, and water extraction activities.

Another limitation of measuring environmental performance is the necessary sector-specific interpretation, which requires much specific knowledge and interpretation. Moreover, the necessity to make choices to construct the measurement tool resulted, to a certain extent, in subjectivity. No matter how accurately these choices concerning the (sector-specific) indicators and their respective weights are made, some degree of subjectivity was unavoidable. This problem was dealt with by specifying the choices as precisely as possible. In fact, the problem of subjectivity also applies to the ISO 14031 and GRI guidelines, as they leave participating companies with many choices. Therefore, a sector-specific part of the general system, on which international agreement must be reached, seems to be a prerequisite. '"•hen either the ISO 14031 or GRI guidelines do actually obtain the status of the commonly agreed-upon standardization for sustainability reporting43, these guidelines will also need such a sector-specific interpretation. Otherwise, these initiatives will not be suitable for

The principles and indicators of the World Business Council for Sustainable Development (WBCSD) are not mentioned here as they measure eco-efficiency, which is a different concept from environmental performance. To be precise, eco-efficiency is the product or service value divided by the environmental influence of a product or service. The environmental influence, as such, is generally one specific

'mental indicator that is distinguishing for the particular product or service, such as energy consumption or greenhouse gas emissions, rather than environmental performance as used in this study, »hich is more concerned with the overall picture.

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environmental benchmarking, which is after all one of their objectives. In 2000, the GR1 did indeed launch a pilot study in a few sectors in order to develop such sector-specific guidelines. The next step should be the development of sector-specific ECIs within the framework of these standardized guidelines. This will be a hard task, as ISO 14031 has already distinguished the importance of ECIs, but noted at the same time the difficulty of developing them and the impossibility of properly implementing them.

Finally, something needs to be said about environmental performance in the specific case of the Dutch dairy industry. It is remarkable that the environmental performance of the individual dairy production plants showed substantial differences, except for plants in the sub--sector cheese. This finding forms an interesting contrast with the opinion of some of the experts prior to the empirical study. They expected a benchmarking among Dutch dain production plants to result in a rather homogeneous picture.

The breakdown of environmental performance into an operational indicator (EOI) and an impact indicator (Ell) did show that, in the Dutch dairy case, the Ell has on average a higher value than the EOI. At first sight, this is an unexpected result, which could be interpreted as if the actual environmental impact of Dutch dairy plants is higher than could be expected based on their environmental operations. However, the different nature of the scales used to measure environmental operations and impact means that a comparison of the absolute values of these two sub-indicators is not viable. Another interesting result is that the Dutch dairy industry seems to have achieved more in the environmental field (in terms of environmental performance, and especially the actual environmental impact) than was communicated or integrated in the organization structure. This observation is truly remarkable, as it is otter stated that business has attractive, written environmental policies and statements, but the environmental action is lacking; in other words, business's environmental management is ahead of business's environmental performance. However, our own results indicate that this is not the case.

8.2 The relation between the independent variables and environmental performance

To understand what drives environmental performance, the different aspects were studied at three levels: internal; corporate; and, business environment, as shown in Figure 8.2. The focus of this study was at the internal organization level, but also the context in which the organization operates was analyzed. This section will reflect upon the relations between these internal and contextual variables, and environmental performance.

Intra-organizational characteristics The results of the study showed that the main research question of this study - What is m relation between intra-organizational characteristics and an organization 's environmental performance? - requires a dual answer. Two main general intra-organizational characteristics were distinguished, the level of centralization and the openness of the culture of an organization. On the one hand, a certain level of general centralization seems to benefit an organization's environmental performance. On the other hand, the openness of an organization's culture did not show a clear relation with its environmental performance. These conclusions also hold for both main sub-indicators of environmental performance environmental operations (EOI) and impact (Ell).

Reflections on the Greening of Organizations 209

Figure 8.2: The research model

Environmental management indicators:

• Env. policy & strategy 1 Env communication 1 Env. organizational

structure 1 Knv. management

commitment

Business environment

However, when centralization and culture are translated to the environmental level, these intra-organizational characteristics seem to be positively related to an organization's enuronmental performance. The more environmental affairs are centralized within an organization, the higher its environmental performance. In line with this positive relation, the results of this study suggest that the more open and the stronger the environmental culture within an organization, the higher is its environmental performance. This observation also applies if environmental commitment is taken as a proxy for environmental culture.

The conclusion that a specific organization culture, such as environmental culture, has much larger explanatory power than culture in general for specific organizational phenomena, such as environmental performance improvement, is in line with recent research (particularly Schneider et al., 2000, and Cordano & Hanson Frieze, 2000). In Schneider et al.'s empirical study on the influence of a service culture on the service level of an organization, they concluded that a specific culture is much more capable of explaining specific organizational characteristics than the general organization culture. In addition, Cordano & Hanson Frieze's (2000) environmental interpretation of Ajzen's (1991) theory of planned behavior, also supports the conclusion that environmental culture has much larger explanatory power for environmental performance improvement than the general organization culture. In Ajzen's '1991) theory of planned behavior, a person is more likely to perform a certain type of behavior as behavioral intention increases. Behavioral intention is determined by attitudes, subjective norms, and perceived behavioral control. Behavioral intention indicates the amount )i effort a person exerts to perform a certain type of behavior. It captures the motivational actors that produce planned behavior. Cordano & Hanson Frieze proved that this theory of planned behavior is also valid for environmental behavior. As behavioral intention is very closely related to commitment and culture, this means that a strong environmental commitment and culture is much more related to a high behavioral intention to take environmental actions than an open culture in general.

Therefore, it can be concluded that this study suggests that environmental culture and commitment are important intra-organizational characteristics influencing an organization's environmental performance. Nevertheless, more research is needed to design an adequate measurement tool for environmental culture and to establish this role in an industry-wide

210 The Greening of Business

perspective. Moreover, the measurement tool for environmental management commitment needs more fine-tuning and industry-wide testing.

These conclusions on the role of centralization regarding environmental affairs and environmental culture in relation to an organization's environmental performance, argue the need for an organization to be ambidextrous when environmental management and actions are considered. In other words, to reach an optimal environmental performance, organizations simultaneously need apparently contradictory internal organizational characteristics: a high level of centralization of their environmental affairs, and an open and strong environmental culture.

Environmental management Although traditionally often viewed as part of environmental performance, the environmental management indicators (EMIs) were interpreted in this study as environmental internal organizational characteristics, which in the research model (see Figure 8.1) assumed intermediate role in the relation between the general intra-organizational characteristics and environmental performance. The results of the study generally showed a strong positive relation between environmental management and environmental performance. At first sight. this positive relation questions the separation of environmental management and performance However, this positive relation was based on environmental operations rather than on environmental impact. This weak relation between environmental management and environmental impact proves the relevance of this division. In addition, the diversity of the environmental performance and management values for individual production plants also justifies this separation.

The strong positive relation between environmental management and performance raises the question: To what extent do environmental management indicators (EMIs) serve as leading indicators for an organization's environmental performance? In other words, to what extent does environmental management lead to future environmental performance improvement0

The absence of any (or in some cases even a negative) relation between some of the EMIs and the environmental impact indicator (Ell) in the Dutch dairy industry might be explained b) the time needed before environmental management can result in actual improvement of the environmental impact. However, given the cross-sectional nature of this study, it can only be assumed that EMIs serve as leading indicators for environmental performance. In other words, it is assumed that environmental management is an instrument by which an organizations environmental performance can be steered. To actually prove this relation, longitudinal research is necessary due to the time lag between environmental management and an actual improvement of environmental performance.

Contextual variables This study focused on internal organizational aspects, but also paid some attention to the context in which the greening of organizations takes place. Although this context falls outside the power of (the managers of) the individual production plants, it is important to understand its relation with environmental performance. Therefore, contextual variables at the corporate and business environment levels were introduced in the research model. The two corporate level variables: the generic strategy followed by an organization, and an organizations ownership structure, were both found to influence a dairy organization's environmental performance. First, the results of the study showed a clearly lower environmental performance for dairy plants which followed a differentiation strategy than for plants with a cost leadership, a mixed or a niche strategy. The main cause for this lower environment"

Reflections on the Greening of Organizations 211

performance is the nature of the production processes inherent to a differentiation strategy, as differentiation generally leads to smaller batches and a more intensive use of resources.

Second, the study also showed that a private ownership structure seems to benefit an organization's environmental performance more than a traditional cooperative or owner/manager' ownership structure. However, 'changing cooperatives' - cooperatives which increasingly resemble private firms, now characteristic for the Dutch dairy industry -jo not show a different relation with environmental performance compared with private dairy firms. In the changing cooperative, it is exactly those characteristics that might frustrate an organization's environmental performance which have changed in the direction of private firm characteristics. These observations regarding the relation between the two corporate level iariables - generic strategy and ownership structure - and an organization's environmental performance also hold for the breakdown of environmental performance into its two main äib-indicators (the EOI and the Ell).

Al the business environment level, the study distinguished two variables - stakeholders and market developments - which proved to be very difficult to separate in practice. This is [«cause developments in the market result in a certain balance of power between the diverse stakeholders and the dairy producers. Although theoretically all stakeholders can influence an organization's environmental performance, in the case of the Dutch dairy industry the main stakeholders turned out to be the regulator, the dairy farmers, the retailers, the consumers, the :ompetitors and the local communities. Clear developments and trends regarding the influence of the stakeholders on dairy producers' environmental performance can be discerned. However, due to the interwoven nature of these variables it is impossible to break down the influence of these developments and trends on the environmental performance sub-indicators, regarding environmental operations (EOI) and impact (Ell).

addition, it is not possible to unambiguously determine the total effect of these influences. Themain causes for this difficulty are the complexity of the sphere of influence. A multitude öl different forces can benefit and frustrate an organization's environmental performance. The international concentration process in the dairy industry, for example, has resulted in fewer ad larger players in this industry. On the one hand, larger dairy firms enjoy economies of scale resulting in higher efficiency, which might benefit their environmental performance. On the other hand, some players became so large and cost-efficient (such as dairy firms in Australia and New Zealand) that for Dutch dairy firms a cost leadership strategy in certain market segments was no longer viable. A switch to a differentiation strategy, based on more complex technology and a higher added value, was the alternative. However, this alternative could also frustrate the organization's environmental performance. The total environmental effect of such developments is hard to determine. Besides this complexity, market fevelopments and the balance of power between different actors are difficult to measure in concrete terms. Therefore, the extent to which these forces reinforce, weaken or interact with each other is hard to establish. To assess this properly, it would be necessary to undertake a different kind of study than this one, which is founded primarily on the internal aspects.

Main drivers for the greening of industry « can be concluded that environmental intra-organizational characteristics are the main internal drivers for the greening of the Dutch dairy industry. Because of this environmental translation of the general intra-organizational characteristics, the environmental management indicators (EMIs) and the intra-organizational characteristics come to resemble each other, rhe level of centralization of an organization's environmental affairs is closely connected to

212 The Greening of Business

EMI organization structure, and environmental culture is closely related to EMI management commitment. In addition, it can be concluded that the contextual variables do influence the greening of Dutch dairy firms, but that the total environmental effect is hard to detennine. These conclusions regarding the internal drivers for environmental performance have some consequences for the research model, which will be discussed in the next section.

8.3 Review of the research model

The research model starts from the assumption that environmental performance improvement is basically an internal affair, which has to be dealt with within the boundaries of the external environment, both at the corporate and business environment (meaning the non-natuaral environment) level. Moreover, it assumed that environmental management is not a part of environmental performance but rather consists of instruments designed to steer environmental performance. So far, all these observations have proved to be valid. The main discrepancy between the assumptions on which the initial research model was based and the results of the empirical study is the role of the intra-organizational characteristics. In the research model, it was assumed that the intra-organizational characteristics 'level of centralization' and 'openness of culture' are positively related to an organization's environmental performance. The case of the Dutch dairy industry, however, only shows such a positive, though not linear. relation for the level of centralization. When these characteristics were translated from the general to the environmental level, there seemed to be a positive relation between both intra-organizational characteristics and environmental performance. With this environmental interpretation, the intra-organizational characteristics closely resemble two of the environmental management indicators: EMI organization structure and EMI management commitment. Therefore, general intra-organizational characteristics deserve to have a separate place in the research model, as they serve as conditions under which the greening of organizations takes place. The full understanding of these conditions and their possible effects on an organization's environmental performance increases the insight into, and the possibilities to steer, the greening of organizations. The same holds for the contextual variables at the corporate and business environment level. A good insight into these internal and contextual variables is required to find a good balance between the various environmental management instruments. On the basis of these conclusions, the original research model was adapted as shown in Figure 8.3.

The greening of organizations at the plant level is central to this model. It assumes that four environmental management instruments are available to steer an organization's environmental performance. Thus the core oval of the model is the actual playing field of environmental and plant managers regarding their environmental affairs. However, the division or corporate headquarters can also influence the process. At the same time, other internal and contextual variables at the corporate and business environment level also influence or detennine the boundaries of an organization's environmental performance. These variables and their possible consequences for the organization's environmental performance are important to know and understand, as they provide the framework and the boundaries in which the greening of organizations takes place.

The next section will deal with the value of the Dutch dairy industry as a case study. Moreover, the implications of the results of this case study and the resulting adapted model ot the greening of organizations will be put in a broader general business and international perspective.

Reflections on the Greening of Organizations 213

Figure 8.3: The greening of organizations

Business environment

M The value of the dairy case study in a general business perspective

The case study of the Dutch dairy industry proved to be an interesting and feasible case with which to test the research model that was developed in this study. Because of this industry's division into only a few different sub-sectors with clearly diverse features in terms of both general and environmental characteristics, sufficient homogeneity was present to benchmark the plants in each sub-sector regarding their environmental performance. Moreover, the full cooperation of the entire sector, which resulted in a representative sample of production plants that actually participated in the study, was indispensable for the success of this study. This full cooperation, which was agreed at a meeting of the dairy trade association, also resulted in the actual willingness of plant managers and environmental managers to be interviewed. Their corporate headquarters had already communicated the importance and need to participate in this study.

The combination of interviewing the involved managers and the use of other data sources, such as company documents, proved to be very effective to measure an organization's environmental performance. The assessment of an organization's environmental performance partly relies on 'soft' indicators, by which also perceptions can be measured. The differences between the individual environmental managers' perceptions and the perception of the researcher regarding the value of environmental sub-indicators are exemplary for the importance of perceptions. As the researcher did all the interviews, a good overview of the environmental practices and accompanying extremes within the sector was developed. This total overview is an important condition to develop a valid environmental benchmark. Therefore, personal interviews are preferred to, for example, mailed questionnaires. Besides the value of the case study to benchmark the environmental performance of the various organizations that belong to the particular sector, the case study also proved to be valuable in providing insight into the variables that benefit or frustrate environmental performance.

It can be concluded that a sector-level approach is imperative to the benchmarking of organizations' environmental performance. Moreover, such a benchmarking requires a

214 The Greening of Business

sufficient level of homogeneity in production processes and the commitment of the whole sector to co-operate, in order to guarantee a representative sample. The combination ol different methods of data collection, in which the emphasis is placed on personal interviews with environmental officers, is a suitable way of data collection. Furthermore, a case study, with such a high diversity of all the independent internal and contextual variables that can possibly influence an organization's environmental performance, can certainly contribute to the insight into the drivers for the greening of organizations. Nevertheless, this degree of detail also increases complexity.

Now it has been concluded that the Dutch dairy industry was a valuable and interesting case to test the research model of this study, the question arises: What value does the adapted model have for business in general? In other sectors of industry, other environmental issues and their accompanying priorities will be prevalent. The environmental performance and three of the environmental management indicators (EMIs) (EMI policy & strategy; EMI communication; and, EMI organization structure) will consequently need fine-tuning towards the sector-specific features. The fourth EMI, management commitment, applies to all sectors of industry, as personal drivers are measured irrespective of sector peculiarities. However, this measurement instrument is still at the explorative stage in this study and needs more refinement. Moreover, as the model proved to be valuable for the Dutch dairy industry, which is a sector with relatively few environmental problems, its power of discerning other more polluting sectors of industry is likely to be even larger. In addition, the use of the model in a foreign context would require country-specific adaptations for both environmental performance and management. These adaptations could be based on differences concerning other requirements, i.e. environmental reporting by the regulator, and cultural differences in environmental commitment. Therefore, an international environmental performance benchmark would need to be adaptated for specific factors.

The framework in which the greening of organizations takes place, based on the internal and contextual variables, will be highly sector-specific as well. In other words, each sector of industry has its own sphere of influence in which the greening of the individual organizations takes place. For example, the corporate level variable 'ownership structure' was a distinguishing factor in this case study, whereas in many other sectors of industry this variable does not play a role at all. Also a situation can occur where in certain sectors of industry the nature of the production process requires strategy changes based on the presence of environmental problems. Another example concerns the business environmental variables. In each sector of industry, other market developments are present and another set of stakeholders will be important in environmental terms. Even the stakeholder, 'the regulator', that was held constant in this case study, can play a distinguishing role when the sector of industry is studied in an international perspective. Unlike the difficulty of creating an international environmental performance benchmark, the use of the model in an international perspective will not cause problems as long as it is possible to benchmark environmental performance within one country. The driving forces for environmental performance improvement within and between different countries can be analyzed in this way.

Therefore, it can be concluded that the model is also applicable to an industry-wide and an international situation. The main idea of the model, i.e. using environmental management as an instrument to steer the greening of an organization within its internal and contextual boundaries, holds for both an industry-wide and an international situation. However, the considerable time investment in the measurement of dairy companies' environmental performance makes the use of the Global Reporting Initiative (GRI) or ISO 14031 guidelines

Reflections on the Greening of Organizations 215

much more attractive for the actual performance measurement in the framework of the model, especially since now standardized sector-specific guidelines are under development.

wever, the distinction between environmental management and performance should be made when these guidelines are used. Given the adaptations of the original research model, k final section below will elaborate on the managerial and policy implications of this study.

8,5 Managerial and policy implications

The main idea underpinning the adapted model concerns the exclusive position of environmental management indicators (EMIs) to actually influence an organization's environmental performance. The EMIs can be seen as a tool kit for managers, filled with four instruments - policy & strategy; communication; organization structure; and, management commitment - among which they have to find the right balance in order to reach the optimal environmental performance. This tool kit should give a manager, who observes no or insufficient improvement in the organization's environmental performance, insight into how [he situation might be changed. If, for example, the organization's environmental policy and strategy are already well defined and pro-active, the organization might feel the need to do something to improve its internal environmental communication, and the general environmental commitment among its employees, or incorporate environmental affairs into :he organization structure. The remarkable observation that the Dutch dairy industry seems to lake more environmental action than that it actually communicates can also be explained in terms of finding the right balance between the four environmental management tools. However, the aim of this study is not to develop a protocol for the optimal balance between tee tools (if indeed this is possible at all). In any case, the optimal balance will vary for each individual organization.

The other independent variables at the internal and contextual level (see Figure 8.3) provide the framework in which, and the preconditions under which, managers can use these tools. The insight into the relation between these variables and environmental performance provides managers with useful information about the scope of their playing field. However, on the basis of the research model and the results of this study, it is impossible to establish priorities among either the environmental management tools or the other independent variables. It is lore important to be aware of the different levels at which an organization's environmental performance can be influenced. Business environment variables are given, and cannot be hanged by, individual managers. Influencing corporate level variables and general intra-organizational characteristics for environmental purposes alone will, in practice, also be virtually impossible. Moreover, this is certainly not what the research model suggests. Only in certain extreme cases, however, when, for example, environmental problems threaten to close down a production plant, might the organization change its strategy as result of environmental concerns.

Finally, policymakers can also use these insights into the greening of organizations. Regarding the internal aspects of the greening of organizations, an important conclusion of litis study is to emphasize the difference between environmental management and environmental performance. Policymakers should be careful not to confuse environmental management with environmental performance. The most obvious EMI that is often confused wth environmental performance is EMI policy & strategy. For example, an organization with M excellent environmental policy document (BMP) does not automatically have the expected outstanding environmental performance, in terms of actual outcome. This also holds true for

216 The Greening of Business

the other way around: the absence or low quality of an organization's environmental policy document does not automatically imply a very low environmental performance Environmental communication runs the same risk of 'window dressing' versus 'silent pro-activity'. However, for policymakers it is harder to obtain full insight into the other twoEMk EMI organization structure and EMI management commitment.

It is also important for policymakers to understand the corporate and business context in which an organization has to operate, in order to obtain a good picture of the scope of an organization's playing field. Specific international market developments, such as the financial-economic crises in the former Soviet Union and South-East Asia, resulted in the collapse of these markets and increased competition from dairy producers in German*. Australia and New Zealand. The choice to stay in this market, which is directly related to employment, implies certain inevitabilities, such as the switch to a differentiation strategy, which might frustrate an organization's environmental performance, as it is more resource intensive.

A better knowledge of the sphere of influence regarding organizations' environmental performance enables policymakers to balance their policy instruments more successfully. With the insight into organizations' impediments and possibilities, policymakers will be in a better position to give incentives, in order to support the greening of industry.